Donegal sees €3.2m loss

Donegal Creameries fell into the red last year, showing a pre-tax loss of nearly €3.2 million, but boosted revenues by almost 14%.

The drop in fortunes was mainly due to last year’s restructuring efforts by the Letterkenny-headquartered group, which has repositioned itself into a broad agri-services business rather than chiefly a dairy company. Operating profit, before exceptional items were taken into account, fell by just over 8% to €3.64m. There was also a 24.3c drop in adjusted earnings per share — from 73.1c to 48.8c.

Despite the company’s net debt also rising, last year from €23.2m to €32.9m — mainly due to acquisition costs — the dividend per share was unchanged at 16c.

Donegal chairman Geoffrey Vance said the group had undergone “transformational change” in 2011, via the sale of its liquid and trade milk and agri-stores businesses.

“It was important that we delivered an alternative long-term solution for our milk business, for the benefit of all our stakeholders. I’m confident that the disposal of our liquid and trade milk businesses and our agri-stores business, to Connacht Gold Co-op, provides such a solution. Our milk producers will now have access to quota and will be part of a larger dairy business, which has excellent capacity to process their milk.”

Mr Vance noted last year’s disposals were balanced with two “important” acquisitions — Scottish-based potato producer AJ Allan and London-based niche yogurt business Biogreen.

Managing director Ian Ireland said 2012 is a year of consolidation. “Our key strategic objectives of the past number of years have not changed and, following the disposals, we will be in a position to increasingly focus our financial and management resources on the strategic areas of seed potato, value-added dairy and associate investments, so as to deliver shareholder value.”